The unwinding of a cross shareholder agreement between Kuehne & Nagel International (KNI) and Sembcorp Logistics resulted in the sale of a 5% stake in the latter yesterday (Monday). The deal follows an agreement to terminate a four-year arrangement originally designed to capitalise on a global outsourcing trend that never quite materialised as planned.
Two weeks ago, KNI announced that it would pay SembLog S$1.3 billion in cash for the 20% stake held in it. SembLog has said that it will return the cash to shareholders in the form of an S$750 million special dividend. The remaining S$250 million will be used for capital reduction.
JPMorgan was lead manager of the placement, which was marketed at S$2.22 to S$2.26. The 42.5 million share deal was priced towards the aggressive end at S$2.26, raising proceeds of S$96.1 million ($57.8 million).
At this level the deal came at a 1.37% discount to the stock's S$2.29 close and represented 9.4 days trading volume. Pre deal the group had a freefloat of 34%, with SembCorp Industries owning a further 61%.
Fund managers report that the order book closed about four-and-a-half times covered with participation by about 25 accounts.
Year-to-date, the stock is up 14.5%, but has fallen about 10% since the company announced the termination of the cross-shareholding agreement. Analysts estimate that KNI accounted for about 35% of SembLog's earnings.
The company is currently trading on a P/E ratio of about 20 times 2004 earnings, although the cash infusion from KNI will adjust this to about 14 times.
